With the rise in popularity of cryptocurrencies, and more particularly, Bitcoin, the question which isn’t immediately thought of by investors is: how do cryptocurrencies fit into your estate plan and have you accounted for them? KEZIA TALBOT, Legal Adviser, BDO Wealth Advisers sheds some light.
Whilst the Reserve Bank, in its Position Paper on cryptocurrencies, has determined that cryptocurrencies are not legal tender, this does not mean that the cryptocurrency which you own is not deemed to be an asset in your estate for all other purposes. Cryptocurrencies are, however, subject to the normal principles of income and capital gains tax, depending on the taxpayer’s intentions. Therefore, they will be treated as an asset in your estate for both executor’s fees and estate duty purposes, if your executor is even aware of the cryptocurrency which you own.
It would be tragic if, for instance, your entire estate comprised the ownership of several bitcoins, but your financial planner or attorney was not aware of this when assisting you with your estate planning and the drafting of your Will, and later on, when administering your estate, as this would result in your heirs receiving little to no inheritance, whilst your estate could be worth several hundreds of thousands of Rand.
Bearing in mind the anonymous nature of cryptocurrencies and the manner in which you hold ownership of the cryptocurrency, it would be virtually impossible for your executor to trace your holdings and properly account for them if they have not been brought to his or her attention. Furthermore, by not including your cryptocurrency in your estate plan, it will be likely that the liquidity calculations performed during estate planning will be inaccurate, thereby impacting on the estate administration process.
As the value of cryptocurrency, by its very nature, is volatile and not generally affected by the same events which affect traditional currencies, it will be difficult to calculate precisely what the effect on your estate will be, from a tax point of view. But this value should be assessed each time you meet with your financial planner, to determine the impact at that point.
So, how do you deal with cryptocurrency in your estate?
In order to understand this, it is necessary to go back to basics and understand how cryptocurrency transactions, and in this case, bitcoin transactions, work:
Satoshi Nakamoto, the creator/s of bitcoin, defines bitcoin as “a chain of digital signatures. Each owner transfers to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin. A payee can verify the signatures to verify the chain of ownership.”
Unlike traditional currencies, bitcoins do not exist in a physical form. Most bitcoin owners have bitcoin wallets, which reflect the value of your bitcoins. In reality, however, the wallet contains the keys to your bitcoins.
As the keys are crucial for transferring ownership or spending your bitcoin, it is the keys which need to be protected and practically dealt with by your executor.
If a key is lost or no longer accessible, then, in essence, you will have lost your bitcoin.
The challenge, therefore, is to make your executor aware of your ownership of bitcoin and to ensure that he or she has access to the keys.
Without delving into the technical aspects of this discussion, a few options would be to: make a backup copy of your wallet and store same on an external hard drive, which your executor will know how to access, or ensure that you have transcribed the access details for the wallet in a separate document, addressed to your executor. Both the backup and/or the document setting out your access details for your wallet will need to be stored in a secure place, only identified to your spouse, executor or other trusted person, as these details are tantamount to your internet banking login details.
Lastly, it may be necessary to review your current Will or have a new Will drafted, in order to ensure that you have nominated an executor who would be comfortable dealing with these types of assets, and to ensure that your wishes regarding these and other assets, are correctly reflected.
Welcome to world of 2099
The world of 2099 will be unrecognisable from the world of today, but it can be predicted, says one visionary. ARTHUR GOLDSTUCK met him in Singapore.
Futuristic structures tower over the landscape. Giant, alien-looking trees light up with dazzling colours amid the hundreds of plant species that grow up their trunks. Cosmetic stores sell their wares via public touch-screens, with products delivered instantly in drawers below the screens.
This is not a vision of the future. It is a sample of Singapore today. But it is also an inkling of the world we may all experience in the future.
Singapore was the venue, last week, of the World Cities Summit, where engineers, politicians, investors and visionaries rubbed shoulders as they talked about the strategies and policies that would enhance urban living in the future.
As part of the Summit, global payment technologies leader Mastercard hosted a small media briefing by one of Singapore’s leading thinkers about the future, Dr Damian Tan, managing director of Vickers Venture Partners. The company’s slogan “We invest in the extraordinary,” offers a small clue to Tan’s perspective.
“We look as far forward as 2099 because, as a venture capital firm, we invest in the long term,” he tells a group of journalists from Africa and the Middle East. “Companies explode in growth because there is value in the future. If there is no growth, they won’t explode.”
The big question that the Smart Cities Summit and Mastercard are trying to help answer is, what will cities look like in the year 2099? Tan can’t give an exact answer, but he offers a framework that helps one approach the question.
“If you want to look at 81 years into the future, and understand the change that will come, you need to double that amount and look into the past. That takes us to 1856. The difference between then and now is the difference you can expect between now and 2099.”
Click here or on the page link below to read on: Page 2: Soldiers and Health in 2099.
- Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter on @art2gee and on YouTube
Street art goes electric
Kaspersky Lab and British street artist D*Face have unveiled the first-ever “art helmet” design at the Formula E finale for electric cars in New York.
The ‘Save The World’ helmets will be raced by DS Virgin Racing’s drivers, Sam Bird and Alex Lynn, as they traverse the New York street circuit during the final races of the Formula E season.
The announcement signals the first art helmet by a Formula E team, continuing the heritage of art in motorsport and the cybersecurity brand’s commitment to contemporary art, creativity and innovation. D*Face took inspiration from Kaspersky Lab’s tagline, “A Company To Save The World”, and hopes that his colourful work will inspire people to take positive action.
D*Face will announce his first-ever art car design with a custom-made livery for the DS Virgin Racing Team. Its design will be released at the “Art Goes Green” event after Saturday’s race. The helmets and art car are the latest installations in the “Save the World” collection, following a major permanent public mural that was installed in Brooklyn, New York, in May.
D*Face, whose real name is Dean Stockton, said: “It is exciting to work with Kaspersky Lab on this project and create art with a real message of hope for a better future. After all, this is our world and we need to look after it. It will take every one of us to make a real lasting, impactful change. I love the mentality of the DS Virgin Racing Team and that of Formula E by showcasing sport in a way that doesn’t harm the environment, but is still just as exhilarating and fun.
“It is time for us all to stand together and make a change… be that stopping data steals, climate change, plastic waste or using damaging fuels. I want everyone to make a pledge to do one thing that will help make a change.”
As a sponsor of DS Virgin Racing Team, Kaspersky Lab is responsible for protecting the team’s devices against cyber threats. The company sees the technical environment in the global sport of Formula E as the next frontier in furthering its research and development of new technologies to keep vehicles secure in the digital world.
Sylvain Filippi, Managing Director at DS Virgin Racing, said: “The whole team fully supports this great initiative and our thanks got to Kaspersky and D*Face for their collaboration. It’s an honour to have such an innovative artist bring his talents to bear in our team ahead of the season-finale; the car, drivers’ crash helmets and mural all look amazing.”
Aldo Fucelli Pessot del Bo, Head of Global Partnerships and Sponsorships at Kaspersky Lab added: “There is a need for innovation on a global scale, both in contemporary art and in the fast-growing sport of Formula E. Now, for the first time ever, Kaspersky Lab is proudly bringing together the two sectors in an effort to Save the World and unleash creativity, encourage freedom of expression and further innovation.”